Abstract
Based on these preliminary tasks, Chap. 4 formulates the capability approach in an economic framework. Technically speaking, the capability approach can be formulated as an extended maximization model in economics by extending its domain to include the functioning space. This extended framework, including both commodity spaces and functioning spaces, on the one hand, demonstrates the robustness of the general equilibrium model in economics, and on the other hand, clearly shows characteristics of the capability approach distinguished from the traditional utility approach. It is thus suggested in Chap. 4 that the capability approach can compel us to carefully review basic concepts in traditional economic theory relying on the concept of equilibrium and individual rationality and criteria of optimality and efficiency.
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Notes
- 1.
In this chapter, the distinction of “functionings” and “sub-functionings” is only for analytical purposes. It does not mean that “sub-functionings” are in any way lower or less important than “functionings” in terms as examples of morality or aesthetics.
- 2.
In a sense, the latter corresponds to “transcendental approach” in the dichotomy provided by Sen in The Idea of Justice (Sen 2009a), while the former corresponds to the “comparative approach”.
- 3.
In reconsidering the foundation of the methodological framework of economics, Sen points out the fact that the motivation of individual activities can go beyond self-interest, self-welfare, or self-goals (Sen 1987a).
- 4.
In defining Eq. (4.1), for simplicity, we omit the sign of an individual i.
- 5.
The marginal rate of technical substitution (RTS) can be deduced from a total differentiation of \(t = f\left( {x_{i1} ,x_{i2} } \right)\) by assuming that \(dt_{i} = \frac{\partial f}{{\partial x_{i1} }}dx_{i1} + \frac{\partial f}{{\partial x_{i2} }}dx_{i2} = 0\).
- 6.
We assume that set C satisfies the following conditions: (1) if resources or utilization abilities are zero, C is reduced to the origin (of the coordinate axes), (2) C is bounded and closed set, (3) C is comprehensive set.
- 7.
That is, \(- \frac{{dL_{i} }}{{dT_{i} }} = \frac{{\partial F_{i} }}{{\partial T_{i} }}/\frac{{\partial F_{i} }}{{\partial L_{i} }} > 0\) and \(- \frac{{d^{2} L_{i} }}{{dT_{i}^{2} }} = \frac{d}{{dT_{i} }}(\frac{{\partial F_{i} }}{{\partial T_{i} }}/\frac{{\partial F_{i} }}{{\partial L_{i} }}) < 0\).
- 8.
“s.t.” = “subject to”.
- 9.
In the previous model, the marginal rate of technological substitution (RTS) of t = f (xi1, xi2) is interpreted to be a shadow price in this sense.
- 10.
More precisely, individual skills that are estimated by the prices of commodities.
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Gotoh, R. (2021). An Economic Modeling of Individual Capability. In: The Ethics and Economics of the Capability Approach. Hitotsubashi University IER Economic Research Series, vol 46. Springer, Singapore. https://doi.org/10.1007/978-981-15-5140-6_4
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DOI: https://doi.org/10.1007/978-981-15-5140-6_4
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